Gun maker Smith & Wesson (NASDAQ:SWHC) will report fourth-quarter and full-year 2007 financial results after Thursday's close.

What analysts say:

  • Buy, sell, or waffle? Analysts are locked and loaded with Smith & Wesson; all five covering the gun maker rate it a buy.
  • Revenue. Sales of guns are expected to rise 39% to $72.8 million.
  • Earnings. EPS, however, is expected to remain flat at $0.10 per share.

What management says:
All the chambers have been loaded for Smith & Wesson as it continues its remarkable turnaround. While it seemed difficult to imagine improving on fiscal 2006, which saw revenue rise 27% and profits soar by 67%, this year has been another bull's eye for the legendary gun maker. Over the first ninemonths of the fiscal year, revenue was up 43% on the strength of a 46% increase in firearms sales. The January acquisition of Thompson Center Arms gives the company immediate firepower in the $1.1 billion longarms segment. Add in new and renewed police contracts, and you're staring down the barrel of a very formidable rival.

President and CEO Michael Golden, who has targeted the turnaround that began in 2004, noted the gun maker has taken aim and delivered on or near the mark. "We have delivered healthy, profitable growth in our core business and have entered all of the major long gun categories within two years of our decision to enter that market."

What management does:
Smith & Wesson has been able to consistently improve margins by keeping expenses in check. Gross and operating margins have been rising at a steady rate, and net margin, while also improving over time, has been subject to more volatility. Branding opportunities have spread the company name to markets that should bolster and expand its reputation -- like sponsoring a NASCAR team that runs at International Speedway (NASDAQ:ISCA) and Speedway Motorsports (NYSE:TRK) -- while introducing its weaponry to new and younger customers.

Margin

01/06

04/06

07/06

10/06

01/07

Gross

27.6%

31.0%

32.4%

32.6%

33.6%

Operating

7.2%

10.6%

10.5%

11.8%

12.1%

Net

4.4%

5.4%

5.3%

6.1%

5.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
At a time when it looks like overall firearms sales are sagging, Smith & Wesson has been able to regain market share at the expense of Sturm, Ruger (NYSE:RGR), Sig Sauer, Glock, and Baretta. The Smith .45-caliber handgun may also become the weapon of choice for the U.S. military as it moves away from .40s, though management has said not to expect much in the way of military sales in the fourth quarter.

The company still looks able to unload an entire clip at expectations. And even though its stock has more than doubled over the past year, there's still good sighting for further appreciation ahead.

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.